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  • Scott Poore, AIF, AWMA, APMA

Markets Relax After Tough Start To New Year

Equities settled back in last week after a rocky start to the New Year.

The market seemed to relax somewhat last week after sputtering in week one. The consumer data was positive overall last week as Consumer Credit for November was stronger than expected and Redbook Sales inched higher on a year-over-year basis. It’s early in 4th quarter earnings season, but the big banks mostly exceeded expectations. Jobless Claims continue to be well under the level typically seen just prior to most recessions, as Claims came in at 202,000 last week, while the typical pre-recessionary levels are higher than 300,0000. However, most investors focused last week on the inflationary data.


The Consumer Price Index inched higher than expected for December (+0.3%).

In contrast, the Producer Price Index moved lower than expected (-0.1%). In our view, inflation has normalized from the anomalies of the COVID era and an overall CPI of 3.4% is close to the historical average. The key moving forward is the health of the consumer. With a stable job market, average inflation, and stable interest rates, one would expect consumer behavior to be balanced. Futures on the first Fed rate cut show 68% for March and similar for the second cut in May (66%). Going forward, earnings and the consumer will tell the tale on the possibility of recession.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


Past Performance does not guarantee future results.

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